5 insurance policies you shouldn't overlook

By Emmet Pierce Posted : 12/13/2010

5 insurance policies you shouldn't overlook How much insurance coverage do you need? Most people know better than to skip health, life and car insurance. But what about other types of coverage?

Following are five frequently forgotten insurance policies you should not overlook.

Disability insurance

Few people think about how they would pay bills if they couldn't work. But nearly one-third of U.S. citizens who enter the work force will become disabled before they retire, according to the Council for Disability Awareness.

Without disability insurance, an injured worker typically would need enough personal savings to survive for two and a half years, the average duration of a long-term disability, according to the council. Social Security may provide disability income, but not everybody qualifies for such aid.

Disability coverage may be long term or short term. Group plans are less expensive than individual policies. Insurance costs vary and are based on factors such as age, gender and occupation.

According to MetLife Life Insurance Company, you should purchase enough disability insurance to replace 60 percent to 75 percent of your annual taxable earnings.

JHA, a division of General Re Life Corporation, conducts an annual group disability market survey. In mid-2010, it found that the average annual in-force premium for short-term disability insurance was $210 per person. The average amount for long-term disability insurance was $243.

Umbrella policy

��To prepare for a rainy day, consider "umbrella" coverage. Umbrella insurance is liability coverage that protects assets and future income beyond the standard limitations of primary policies.

Typically, umbrella policies offer pure liability coverage and are sold in increments of $1 million. They provide protection beyond standard home, car and boat plans.

An umbrella policy "sits over the top of your auto and home polices," says David Snyder, vice president and associate general counsel for the American Insurance Association.

When your primary insurance coverage reaches its limit, the personal umbrella policy kicks in. Premiums typically are between $200 and $300 each year for $1 million in coverage.

If you have multiple vehicles or multiple homes, the cost could rise by several hundred dollars, says Mario Morales, manager of corporate underwriting for MetLife Auto & Home.

Riders for expensive items

If you have filled your dwelling with expensive items, your home insurance policy may be inadequate. Items such as jewelry, collectibles, fine art and musical instruments may exceed the limits of standard homeowner coverage.

In such cases, an insurance rider can provide additional coverage. After you've determined how much coverage you need, visit several insurance companies to compare the costs.

"It could vary, but generally for jewelry items you are looking at $8 to $12 per $1,000 of coverage," Morales says.

Home business coverage

Nearly 60 percent of the nation's home-based businesses do not have proper insurance coverage, according to survey results released in early 2010 by the Independent Insurance Agents & Brokers of America (IIABA).

If a business client is injured on your property, a standard home policy may not pay for the loss. So, anyone who conducts business in their home should review their homeowner policy to determine whether they need separate coverage.

"A business will bring more traffic to your home and change the nature of the risk," says Jim Whittle, assistant general counsel for the American Insurance Association.

Make sure that your home business inventory is insured. Home business coverage generally costs in the neighborhood of $300 annually in most states. Prices vary depending on business types and the level of coverage you choose.

Life insurance

Group life insurance is often offered as part of an employee benefits package. Because the risk is spread among many people, this type of insurance usually is much cheaper than what you would pay for a comparable individual policy.

If you cannot find group coverage to meet your needs, check out individual policies. Costs vary according to risk factors, such as age, occupation and general health. The insurance industry is highly competitive, so shop around for the best value.

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